Fiscal Event (Mini Budget?) to Deliver Economic Growth?

The top line summary of The Chancellor’s Fiscal Event is “throwing” everything at growth to maintain business and consumer confidence.

The top line summary of The Chancellor’s Fiscal Event is “throwing” everything at growth to maintain business and consumer confidence.

The speech was not called a Budget, and for this reason there was no Office of Budget Responsibility (“OBR”) economic forecasts, or forecasts to support the measures announced, The statement was more a list of what they are going to do.  A full Budget is still expected later this year.  Although not called a Budget, the number of tax measures announced (all cuts) was extensive and we have not seen this level of tax announcements for a number of years, particularly in a speech that lasted 35 minutues.

The speech was delivered in what has been a short week, with the Government’s announcements on Wednesday regarding the measures to support businesses with high energy costs, which can be summarised as a cap (similar to the consumer support) for six months, more details below. 

Yesterday the Bank of England announced a 0.5% increase in the interest rate, taking it to 2.5%, a 14 year high, as well as stating the Country is now probably in a recession as GDP has fallen by 0.1%.

Although not specifically stated in the speech, the funding for the measures announced by The Chancellor is to be borrowing, Many have already raised concerns of the UK debt level with the cost of borrowing increasing, with a significant increase yesterday in worldwide rates for lending to the UK.

Big tax headlines - which we don’t believe were predicted to be announced today - included basic rate income tax reduced by 1% to 19% (we predicted this but thought it would come later in the year), and the abolishment of the additional rate band (45% income tax on earnings above £150k).

The Chancellor’s speech was broken down in to three clear parts under what was called “Growth Plan 2022”. These were Energy Plans, Growth and reducing the tax burden.


Consumer Households Energy Price Guarantee (“EPG”)

The EPG will cap the unit price that consumers pay for electricity and gas. This will bring the average household bill down to £2,500 per year for a period of two years from October 2022, as announced earlier in the month. A typical household is expected to save at least £1,000 a year on energy bills. An additional payment of £100 will be provided to compensate those who are not able to receive support for heating costs through the EPG.

Energy Bill Relief Scheme (“EBRS”) for non-domestic users

Although for businesses, schools etc, the Chancellor views this as support to households as the support will protect jobs.  Following the announcement yesterday, a temporary six-month scheme, the EBRS will protect businesses and other non-domestic energy users, including charities and public sector organisations, from rising energy bills this winter by providing a discount on wholesale gas and electricity prices. The government will publish a review into the operation of the scheme in three months to inform decisions on future support after March 2023, focusing in particular on identifying the most vulnerable non-domestic customers and how to continue assisting them with energy costs.  Full details can be found HERE.

Green Levies cover
As part of the EPG, the government will temporarily cover environmental and social costs, including green levies, currently included in domestic energy bills for two years. This will contribute an average £150 saving to the savings provided by the EPG.

Energy Markets Financing Scheme (“EMFS”)
The £40 billion EMFS, delivered with the Bank of England, will help to address extraordinary liquidity requirements faced by energy firms from high and volatile energy prices. The scheme will provide a backstop source of additional liquidity to energy firms in otherwise sound financial health to meet extraordinary variation margin calls. The scheme will provide liquidity to firms through a 100% guarantee, delivered via commercial banks.


The Chancellor advised the UK’s growth was not sufficient. To drive higher growth, the government is looking to expand the ‘supply side’ of the economy, by cutting ‘red-tape’, supporting employment (areas such as childcare, immigration, which are being reviewed), and encouraging investment in the UK (looking at measures which can unlock pension funds to invest in wider areas).

This also includes the introduction of Investment Zones, which will benefit from tax reliefs over 10 years, such as:

  • 100% business rates relief on newly occupied and expanded premises;
  • Full Stamp Duty Land Tax relief on land bought for commercial or residential development;
  • A zero rate for Employer National Insurance contributions on new employee earnings up to £50,270 per year;
  • 100% First Year enhanced capital allowance relief from plant and machinery;
  • Enhanced Structures and Buildings Allowance relief of 20% per year.

In addition, the government will be introducing a UK science/technology scale up fund – The Long-Term Investment for Technology & Science (“LIFTS”) competition, providing up to £500 million to support new funds designed to catalyse investment into UK’s science and technology businesses.

Other plans to encourage growth and maximise the labour force include:

  • Reforms to Universal Credit (“UC”) conditionality to support claimants on UC to secure more or better paid work, including an increase in support and incentives for jobseekers, together with extra support for those aged 50 plus who are out of work;
  • Bringing forward deregulatory package for the UK financial services sector. This will include government plans for repealing EU law for financial services and replacing it with UK rules, and scrapping EU rules from Solvency II;
  • Accelerating the delivery of priority major infrastructure projects across the country, including sector specific changes to accelerate delivery of infrastructure for energy, water resources and national networks; onshore wind planning policy; accelerate roads delivery; giving telecoms operators easier access to telegraph poles on private land. We understand that one of the proposed projects for acceleration into 2023 will be the local A417 Air Balloon project;
  • The limit on variable pay (bonuses) for bankers will be scrapped.


The government’s position on taxation is that it stifles innovation and impacts investment decisions that ultimately damage growth. The government appear to be relying on the idea that by reducing the burden of taxation on businesses and individuals, this will encourage innovation and growth, which will increase profits and (subsequently) increase the overall tax take for the Treasury (or at least, not reduce tax take).

The Growth Plan 2022 introduced a number of tax reforms, including:

For business

  • Planned increase in Corporation Tax rate to 25% from 1 April 2023 now scrapped. The rate will instead remain at 19%;
  • Capital allowances Annual Investment Allowance threshold has been permanently set at £1 million, rather than reverting to £200,000 from April 2023.  (Nothing on the 130% capital allowance, known as the super tax deduction, so for now have to assume this will end 31 March 2023);
  • Expansion of the Seed Enterprise Investment Scheme (“SEIS”) from April 2023, by increasing the amount Companies can raise from £100,000 to £250,000, increasing the gross asset limit to £350,000 and the age limit from 2 to 3 years, to help UK start-ups to raise finance;
  • Expansion of the Company Share Option Plan (“CSOP”) scheme from April 2023, such that qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current limit;
  • No changes to the Enterprise Investment Scheme (“EIS”) and Venture Capital Trust (“VCT”) relief, however, may consider extending in the future, other than confirmation that the EIS scheme will not be abolished and the sunset clause will be extended.
  • The 2017 and 2021 reforms known as the off-payroll working rules (IR35/disguised employment) will be repealed from April 2023. This means a return to all workers providing their services via an intermediary being responsible for their employment status. As the regulations are going to be repealed, we would recommend that anyone operating through a Personal Service Company (“PSC”) reviews their position ahead of April 2023, where their status is currently assessed by the client;

For individuals

  • The basic rate of income tax reduction from 20% to 19% has been brought forward from April 2024 to April 2023;
  • The additional rate of income tax (the 45% rate applied on income over £150,000) will be abolished from April 2023, such that the highest rate of income tax will be 40%;
  • The abolishment of the additional rate will also mean that the highest rate of income tax on dividends will be 32.5% from April 2023, rather than 38.1% on income over £150,000;
  • Cancellation, from 6 November 2022, of the Health and Social Care Levy (1.25%), initially introduced in April 2022 as an increase in National Insurance contributions;
  • The 1.25% increase in the rate of income tax on dividends, which came into effect from April 2022, will be reversed from April 2023.
  • Reform of Stamp Duty Land Tax (“SDLT”) on residential property, by increasing the level at which SDLT is payable from £125,000 to £250,000. All other SDLT rate bands will remain the same.  This change is from today;
  • For first time buyers, the SDLT rate on residential property will increase from £300,000 to £425,000, subject to a maximum property price of £625,000.  This change is from today.

In relation to the planned abolition of the additional rate band, and the reversal of the 1.25% increase applied to National Insurance and dividend income in 2022/23, consideration should be made to delaying dividend payments or delaying salary increases until after April 2023, where this is possible, and does not result in other allowances/sources of income being affected (such as a loss of personal allowance in 2023/24).


  • The office of Tax Simplification (“OTS”) will be abolished, and HMRC will be set a mandate to simplify the tax code;
  • Freezing of Alcohol duty rates from 1 February 2023;
  • The Government will be introducing a digital, VAT-free shopping scheme with the aim of providing a boost to the high street, retail and tourism.

With such a radical approach and significant number of changes, we will wait to see in The Chancellor’s next statement, after some reviews and consultations what other changes could be made.  With his promise to remove tax administrative burdens and complications will they look to remove the complication of the personal allowance being reduced by £1 for every £2 above £100k which gives a 60% tax rate for income in the threshold between £100k and £120k, or abolish the complicated high income child benefit charge.

Should you wish to discuss any items in the Fiscal Event, please do not hesitate to contact the office.